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SDC Future Outlook
Future Outlook
SDC FUTURE OUTLOOK 2008
SDC Jordan 3rd Quarter News
SDC Jordan Current News and Events
 General Information |
The Securities Depository Center (SDC) of Jordan is a public utility institution established in the Hashemite Kingdom of Jordan by virtue of the Securities Law. The Securities Law separated the functions of the Amman Financial Market (AFM) and created the Jordan Securities Commission (JSC), the Amman Stock Exchange (ASE) and the Securities Depository Center (SDC). |
| Brief History |
The SDC commenced operation in May 1999 and is the only entity in Jordan that is legally empowered to oversee the following responsibilities:
- Registration of securities.
- Deposit of securities.
- Transfer of ownership and safekeeping of securities.
- Clearance and settlement of securities transactions.
The SDC is one of the most important institutions in Jordans Capital Market as it holds the ownership register of all issued shares. It has been assigned, in cooperation with the JSC and the ASE, the task of bringing about a qualitative leap in market efficiency. |
| Ownership and Governance |
The SDCs governance structure consists of a seven-member board of directors and the Chief Executive Officer of the SDC. The SDC General Assembly elects four members of the SDC Board of Directors and three members are appointed by the JSC. The Board serves for a term of three years. The daily management and operations of the SDC are the responsibility of the SDCs Chief Executive Officer (CEO). |
| Regulatory Environment |
The Securities Law and the SDCs internal by-laws and instructions govern the SDCs operations. The JSC is the regulatory and supervisory authority in charge of the Jordan capital market and thus the SDC is subject to it supervision. The JSC also approves the SDCs internal by-laws and instructions. |
| Participants |
SDC Membership is obligatory by virtue of the Securities Law for the following entities:
Public shareholding companies, which are divided to:
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Banks
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Insurance Companies
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Service Companies
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Industrial Companies
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Public issuers
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Brokers
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Custodians
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| Services Provided |
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Services related to corporate actions including Increase/ Decrease of capital, Stock Splits and Merger. In addition to authenticate and release of pledge and freezing.
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Market support services such as transaction statement, market activity analysis, portfolio valuation and mark-to-market services.
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The SDC also provides electronic services including e-IPO service and online account viewing through the internet website, members' area and mailbox through the intranet website.
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| Eligible Securities |
Currently, all shares are deposited are the SDC. The SDC seeks to deposit corporate bonds in the future |
| Depository Procedures |
Client Identification and Account Set Up System
Investors are identified and their accounts established on the Depository's database through the SDC electronic systems where the SDC issues a unique number for each investor called the "SDC Investor Number". The SDC number is the National Identification Number (NIN) for natural Jordanian persons or a unique number issued by the SDC to non -Jordanians and other entities.
Investors are identified on the SDC systems in one of the following methods:
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Through the SDC: The investor submits Investor Identification on the Securities Depository Center's Database Form to the SDC to be identified on the SDC electronic systems. The form should include the identification document and the full address.
- Through the broker or custodian: The investor submits Investor Identification and Account Opening Form through one of them. This form should include the identification document. The Broker or Custodian, in turn, verifies the investor's information and submits the investor's form to the SDC.
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| Principles of Clearing & Settlement |
- Centralized clearing and settlement
- Book entry settlement
- Multilateral netting
- Delivery versus Payment (DvP)
- Rolling Settlement
- Same day funds
- Cash settlement via RTGS
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| Clearing & Settlement Procedures |
The transfer of ownership of deposited securities from the sellers account to the buyers account are conducted via book entry as a result of the daily trading files submitted by the Market to the SDC.
Clearing & settlement measures for trading contracts executed at the ASE on the basis of Delivery versus Payment (DvP), where transfer of sold securities is against payment of funds. DvP is considered an important international standard applied in capital markets. Therefore, securities remain suspended in the buyers account until the completion of the settlement process and full payment for their value. No transfer or pledge activity is permitted during this period.
In order to enhance the procedures of control, risk management and data accuracy in the trading process, the SDC-ASE tight coupling was implemented to improve the technical environment related to the broker's cash obligations. The procedures of risk management are conducted by exchanging information between ASE and SDC and direct verification of orders in term of account ownership and clients and brokers data.
The SDC conducts the clearing process to determine the amounts that the broker must pay or receive in accordance with all the trading contracts executed by the concerned broker by subtracting the total amount of his securities' purchases from the total amount of his securities' sales for the trading day.
The broker is notified electronically of the amount due to be paid or received by him. If the broker does not pay the Liquidity Reserve amount or the settlement amount within the specified timeframes, he is considered in breach of his obligations and the SDC takes the necessary measures to fulfill the financial settlement through the Settlement Guarantee Fund. |
| Cash Settlement |
The SDC undertakes the clearing process to calculate the brokers net to pay or net to receive in accordance with all the trading contracts executed by subtracting the total value of the brokers purchases of securities for the trading day from its total sales for that trading day.
The amount that the broker must pay is divided into:
Liquidity Reserve Amount, which has to be paid on (T+1).
Settlement amount to be paid by the broker on settlement date, which represents the difference between the net to pay amount and the Liquidity Reserve Amount.
If the broker does not pay the Liquidity Reserve Amount or the settlement amount within the specified timeframe, then the broker is considered in breach of its obligations and the SDC accordingly takes all the necessary measures to effect the financial settlement through the Settlement Guarantee Fund.
Financial settlements in this stage are conducted between brokers, through the SDC, via money transfers from the brokers accounts to the SDC Settlement Account. Subsequent to money transfers credited to the SDC Settlement Account, the SDC transfers these amounts to the brokers who are net to receive and the SDC.
Cash settlement is conducted via the RTGS system of the Central Bank of Jordan where the SDC became member of this system. |
| Default Procedures for Clearing and Settlement |
The Settlement Guarantee Fund (SGF) was established by virtue of Article (90) of the Securities Law No. (76) Of 2002. Its objectives include:
1. Covering the cash deficit of a Fund member in connection with his purchases of securities.
2. Covering the deficits in the securities account of a Fund member in connection with his sales of securities on the market.
The SGF has a legal personality with financial autonomy and is managed by the SDC Board of Directors and the Chief Executive Officer. Its members include brokers and dealers. The Internal By-Law of the Settlement Guarantee Fund became effective as of 31/12/2004 where the Settlement Guarantee Fund is considered the legal and factual successor of the Financial Broker Guarantee Fund.
The contributions to the SGF are divided to two types bank guarantees payment orders and cash contributions. The contributions are calculated periodically in accordance with specific formulas stated in the SGF by-Law.
Buy-in and sell out measures are also applied in cases of default. |
| Credits |
No credit facilities are provided by the SDC.
SECURITIES LENDING AND BORROWING
Lending and borrowing has not been implemented yet in the Jordan capital market. It awaits the implementation of the necessary legislation |
| International Services & Relations |
Overseas Settlement and Custody Services for Domestic Institutions
This is not applicable in Jordan
National Numbering Agency
The SDC is a full member of ANNA and is the sole numbering agency in Jordan. All Jordanian securities have been assigned ISINs and a full list can be found on the SDC website www.sdc.com.jo.
International Recognitions
SDC complies with the Eligible Securities Depository definition of the US SEC (Securities Exchange Commission) under Rule 17f-7.
US SEC Rule 17f-7 Criteria
SDC Satisfies
Acts as or operates a system for the central handling of securities or equivalent book-entries in the country where it is incorporated, or a transnational system for the central handling of securities or equivalent book-entries;
Yes
Is regulated by a foreign financial regulatory authority;
Yes
Holds assets for the custodian that participates in the system on behalf of the fund under safekeeping conditions no less favorable than the conditions that apply to other participants;
Yes
Maintains records that identify the assets of each participant, and segregate the systems own assets from the assets of participants;
Yes
Provides periodic reports to its participants with respect to its safekeeping of assets, including notices of transfers to or from any participants account;
Yes
Is subject to periodic examination by regulatory authorities or independent accountants.
Yes
Compliance with the G-30 Recommendations
The G-30 recommendations provide an important benchmark for the scope and quality of the securities services in the individual markets. Compliance of SDC with the recommendations of G-30 is listed below:
Trade comparison between direct participants (T+0)
Indirect market participants to achieve affirmation by T+1
Central Securities Depository
Trade netting system
Delivery versus payment
Same day funds
Rolling settlement latest T+2
ISIN and CFI numbering
It is worth mentioning that the SDC is a member in IOSCO, ANNA, FEAS, AMEDA, UASE and CSD.
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| Use of Technology |
The SDC has undertaken a number of technical, strategic, and administrative initiatives to build and strengthen its infrastructure, implement world-class state-of-the-art systems and achieve its goal of true DVP.
The SDC developed a system named the Securities Central Operation Registry Processing & Information Online (SCORPIO) System. SCORPIO, an SDC-designed and implemented system, is a bilingual system that is a complete solution for the registration, deposit and clearing and settlement.
SCORPIO consists of a number of systems and modules for registration, depository, clearing and settlement and also provides mechanism for risk management and surveillance of clearing and settlement. Its modules include brokers, issuers, custodian, surveillance and auditing systems, which taken together enable the SDC to provide investors with a wide range of services.
The SDC implement Business Continuity and Disaster Recovery Plan, which includes developing and updating the infrastructure of the main server's site and Business Continuity Site to guarantee the continuity of the SDC's operations. In addition to construct Disaster Recovery Site in accordance with international standards and requirements in this regard.
These three site were connected by direct communication lines to activate the mechanism of synchronize transport of data based on developed and advanced systems and technology.
The SDC technology and systems meet the international standards of IOSCOs Technical Committee, the Bank for International Settlements Committee on Payment & Settlement Systems (CPSS), the Group of 30, the World Federation of Exchanges (WFE) and the International Securities Services Association (ISSA).
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